Yesterday, the June 25th, 2021 100% Cash-Secured Put position in Twilio Inc. (ticker TWLO) expired out-of-the-money (stock price of $383.69 was above the $300.00 strike price), so the position was closed profitably. The return-on-investment result was +5.5% absolute return in 40 days (equivalent to a +50.0% annualized return-on-investment).
As detailed below, the original Cash-Secured Put was sold at the $270.00 strike price and was subsequently rolled-up-and-out from the June 18th, 2021 monthly options expiration to the June 25th $300.00 strike price. This was done since the stock price had moved substantially higher during the first several days after the original position was established. By rolling up-and-out the original position, the +50.0% annualized roi result achieved exceeded the +41.8% annualized that would have been achieved if the original Cash-Secured Put position at the June 18th $270.00 strike price had not been rolled up to the $300.00 strike.
Twilio Inc. (TWLO) -- 100% Cash-Secured Put Position Closed at Expiration
The original transaction was as follows:
05/17/2021 Sold 1 Twilio Inc. June 18th, 2021 $270.00 100% Cash-Secured Put options @ $9.85 per share.
Note: the Implied Volatility of this Put option was 52.3 when this position was transacted.
05/26/2021 Roll up transaction executed:
Bought-to-Close 1 TWLO 6/18/2021 $270.00 Put option @ $.98 per share
and simultaneously Sold-to-Open 1 TWLO 6/25/2021 $300.00 Put option @
$5.40 per share
Note: The estimated probability that this $300.00 Put option closes
out-of-the-money (stock price above the strike price) on the June 18th options expiration date was approximately 80% when
this roll up transaction was executed.
06/25/2021 One TWLO 6/25/2021 $300.00 Cash-Secured Put option expired out-of-the-money, so the position was closed on the option expiration date.
The Covered Calls Advisor does not use margin, so the detailed
information on this position and the potential result detailed below
reflect that this position was established using 100% cash
securitization for the one Put option sold.
The overall performance result (including commissions) was as follows:
100% Cash-Secured Put Cost Basis: $26,015.67
= ($270.00 - $9.85) * 100 shares + $.67 commission
Net Profit:
(a) Option Income: +$1,424.99
= ($9.85 - $.98 + $5.40) * 100 shares - $2.01 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Twilio stock was above the $300.00 strike price at the June 25th option expiration date): +$0.00
= ($300.00 - $300.00) * 100 shares
Total Net Profit: +$1,424.99
= (+$1,424.99 option income +$0.00 dividend income + $0.00 capital appreciation)
Absolute Return: +5.5%
= +$1,424.99/$26,015.67
Annualized Return: +50.0%
= (+$1,424.99/$26,015.67) * (365/40 days)
